Another ugly turn for Mervyns employees

We received the following memo from a source inside Mervyns. Bottom line: no accrued vacation pay for employees as the company goes into liquidation.

From: Mervyns.Communications

Sent: Thu Oct 23 16:26:26 2008

Subject: Revised 10-23-08 — Mervyns Associate Vacation Update

Dear Mervyns Associate:

Mervyns will soon begin holding GOB sales and winding down operations as part of a Section 363 sale process under Chapter 11 of the U.S. Bankruptcy Code.

Yesterday, the Creditor’s Committee filed a motion to convert the Company’s bankruptcy filing from Chapter 11 to Chapter 7, and also filed an injunction to stop Mervyns from paying accrued vacation.

Mervyns vigorously opposed this development, but this afternoon the Bankruptcy Court ordered Mervyns to stop paying employees for accrued vacation until next Thursday, October 30. At that time, the Court will conduct a full review of the issue.

I am very disappointed with the actions taken by the Creditors’ Committee and the Court’s decision. We did all that we could, along with our advisors, to fight for our employees’ vacation pay, and will continue to do so.

This is not a final decision. As noted above, the Court will conduct a full review of this issue next week. We will be sure to provide a full update on the outcome of next week’s Court decision. As tomorrow will be the final day for most HQ associates, we will ask you to provide your personal e-mail addresses when you pick up your final pay, so we may contact you on that matter. Or, you can visit www.kccllc.net/mervyns for court filings and claim information.